It is difficult to deny the fact that credit cards remain the most popular traditional payment instruments. However, with the rapid development of Internet technologies and the Internet consumer market, electronic payment systems are becoming extremely popular. Paypal and Google Checkout occupy the leading positions in the structure of electronic payment systems today. Paypal “PayPal is recognized as the leader of online payments in the modern Internet business and consumer market.
Paypal has become the largest payment system, which works with eBay online stores. Its rapid development proves, that online payment systems have en extremely promising future. There are several prominent benefits of using Paypal. First, it makes possible to transfer money to virtually anyone who owns email account. Second, creating Paypal account is free. Third, PayPal creates vast opportunities for combining online shopping with traditional means of payment (via bank account or credit card). To block potentially fraudulent access by automated systems, Paypal devised a system of making the user enter numbers from a blurry picture” (PayPal, 2008).
According to Forbes, in 2004 Paypal was responsible for 21% of eBay revenues and 74% of eBay action payments (Kang, 2005). PayPal was able to guarantee the security of online payments for the major portion of online users and buyers. PayPal currently operates a system of fees for the transaction of credit card payments; the rest of the payment services are free for consumers (PayPal, 2008).
Certainly, there are risks of fraudulent operations, as long as PayPal offers unauthorized payment transaction of funds, and the risks of the private banking information disclosure, which is the burden of all online payment operations. One thing is evident: Paypal constantly increases its share of the online market and will keep growing at a steady rate in line with the increasing popularity of online shopping and banking. Google Checkout Google Checkout can be considered as one of the major rivals of PayPal. Being newer to the market, Google Checkout has a chance to grasp new opportunities the online market offers.
Among the major benefits of Google Checkout are “increased conversions with a better checkout process”, which makes it easier for buyers to checkout with retailers, special emphasis on cooperation with merchants, and a system of discounts for AdWord advertisers. These are the three instruments Google Checkout has utilized to increase its online transactions market share (Lion, 2006). “Google stated that as of December 2007 they had signed up over 100,000 merchants and millions of users” (The Google Checkout Effect, 2008).
The new Google Checkout merchant users are provided with an AdWord advertising bonus campaign; additionally, Google Checkout has made it possible to process the sums and payments which are lower than the standard payments across the online transaction industry (Beal, 2006). For those who use Google Checkout frequently, the company offers one-click system of managing online shopping. The company charges 2%+$0. 20 per transaction (The Google Checkout Effect, 2008). However, everything is not as perfect as one may think. When we say that credit cards are fast, easy and familiar to buyers, one cannot say that Google Checkout was equally simple.
In 2006, Google Checkout users started to complain that the service “was too long to complete sales transactions and sometimes cancelled orders unjustifiably and without warning” (Perez, 2006). The problem stemmed from the Google Checkout’s desire to stop fraudulent operations and to control the process of online transactions. Evidently, Google has not taken into account the importance of speed in the contemporary online world: with the payment review process sometimes taking a week, it is hardly possible that Google Checkout will retain its market share.
It will have to re-consider the benefits of its payment processes, to speed up operations in line with the highest quality of payment protection for each merchant and each payment operation. Conclusion Objectively, none of the existing online payment systems is perfect. Google Checkout and PayPal are connected with numerous risks, although they also provide substantial benefits and protection to their online users. It is evident that even despite certain complaints about the quality of online transaction services they will keep conquering the beneficial online market in the nearest future.